Here’s a summary of tender results for blackwood logs sold by Island Specialty Timbers (IST) for the 2013-14 financial year. In the absence of any IST Market Report or any better market information, this small dataset is as good as it gets.
Island Specialty Timbers, an enterprise of Forestry Tasmania, was established at Geeveston in 1992 to increase the recovery, availability and value of specialty timbers from harvesting activities in State forests.
Unfortunately this laudable “mission statement” is not translated into anything concrete or measureable like a business plan. Are these objectives being achieved? What are the measurable performance criteria? How has performance changed over the years? Unfortunately IST does not produce any annual reports, market reports or sales summaries. Also Forestry Tasmania does not report separate financial results for its special timbers activities including IST. So while the “mission statement” is couched in pseudo-commercial language, unfortunately IST exhibits all the hallmarks of a politically motivated public relations exercise.
How do special timbers contribute to Forestry Tasmania’s profitability?
Such a non-commercial, anti-competitive environment makes it difficult to convince farmers that the forest industry is about business and not politics.
It is also curious that although over 80% of the volume of special timbers sold by Forestry Tasmania is blackwood, blackwood makes up only a minor component of the volume of logs tendered by IST every year.
Note that all of the logs and wood sold by IST comes from the harvesting of public native forest. Remember also these tender prices are effectively mill door prices that already include harvesting and transport costs. They are not stumpage prices.
Still I am grateful for the small scraps of commercially useful information that IST provides. This is my attempt to summarise these scraps for the past 12 months.
Summary
For the year 2013-14 a total of 12 blackwood logs were put up for tender by IST. Three of these logs, including the single log in the June 2014 tender, failed to sell. The total value of blackwood logs sold at tender for 2013-14 by IST was $20,800.
The highlight for the year were two very large tear-drop grain logs from the one tree which sold for $9,600 and $7,500 ($2,900 and $2,750 per cubic metre respectively) or a total of $17,100 for 6.04 cubic metres of log from the one exceptional tree. The combination of feature grain, good log quality and large size clearly attracts a significant price premium.
With such incredible prices the obvious question is can blackwood of this size and quality be grown on private land? There are a few key issues that need to be discussed:
Size
The butt log from the above tree had a diametre of over 1 metre, with a total combined merchantable length of 9 metres. Even at the top of the top log the diameter was 83 cm! That is a big blackwood by anyone’s reckoning. Such a log could really only be grown in a (public or private) native forest environment. So yes! Private native forest could be managed to grow blackwood of this size and value given enough time and good management. The goal in blackwood plantations is to produce trees with a diameter at breast height (dbh) of 60 cm in about 35 years. It would take at least 50-60 years to grow a 1 metre diameter blackwood even in a fast-growing environment.
Figured grain
The other key factor with the above logs was the tear-drop grain. Figured grain of any sort is relatively rare in blackwood, tear-drop grain being more rare than fiddleback. Little research has been done on figured grain in trees anywhere in the world. My own belief is that it is both genetic and physiological in origin. Just about all trees have some fiddleback in their stumps as a response to physiological stress. If figure has a genetic component to its origin then there is the potential for cloning. I know a few people in Tasmania who have spent time trying to clone blackwood fiddleback. If feature grain can be cloned then the prospects for commercial blackwood growers improve dramatically. But cloning will only happen within the context of a private blackwood growers industry.
Plain-grain logs
Seven (7) plain grain blackwood logs totalling 10.0 cubic metres sold at tender during the year for a mean of $390 per cubic metre, or a volume-weighted mean of $370 (see Table 1). Some of these logs may be considered equivalent to those grown in commercial blackwood plantations. Logs ranged in size from 0.57 to 3.46 cubic metres, with the smallest log attracting the biggest unit price of $600 per cubic metre!
TABLE 1
| |
Number |
Average of SED (cm) |
Average of Len (m) |
Average of Vol (m3) |
Sum of Vol (m3) |
Average Unit Price ($/m3) |
Sum of Value ($) |
| Sold |
7 |
59 |
4.1 |
1.4 |
10.05 |
$390 |
$3,707 |
| Unsold |
3 |
59 |
4.5 |
1.5 |
4.35 |
| Plain Total |
10 |
59 |
4.3 |
1.4 |
14.40 |
$390 |
$3,707 |
| Sold |
2 |
88 |
4.5 |
3.0 |
6.04 |
$2,825 |
$17,107 |
| Tear drop Total |
2 |
88 |
4.5 |
3.0 |
6.04 |
$2,825 |
$17,107 |
Notes: SED is log small end diameter, Len is log length, Vol is average log volume.
Figure 1 shows the frequency distribution of prices for the blackwood logs sold. For plain grain blackwood logs prices ranged from $180 to $600 per cubic metre. With a mean sale price of $390 per cubic metre, blackwood is attracting a similar price to good quality pruned Macrocarpa cypress sawlogs in New Zealand (see Allan Laurie’s great website). This is surprising given the long heritage of blackwood in the market compared to Macrocarpa which is a relative newcomer to the premium timber market. I have yet to see any equivalent mill-door prices for New Zealand grown blackwood.
FIGURE 1
The dataset was too small to allow any analysis or correlations to be made between price and log quality for the plain grain logs. The fact that the very large 3.5 cubic metre log from the April tender, by far the biggest plain grain log for the year, sold for only $430 per cubic metre indicates that log size by itself does not necessarily attract a price premium.
It seems unlikely that this tiny set of market-based blackwood log prices is representative of the broader blackwood market, given that they represent just 0.18% of the annual blackwood harvest (excluding the unknown volume sold from private property). I suspect the IST tenders attract only a very limited range of small, custom buyers with limited purchasing power.
It would certainly improve market transparency and stimulate greater investor confidence if IST would tender more blackwood and demonstrate real commercial focus. Increasing the blackwood volume tendered to even 100 cubic metres per year would be a good start. At a bare minimum IST could produce an annual summary of tender results.
In the mean time I look forward to providing another summary of IST blackwood tender results next year.
At $390 per cubic metre a mature blackwood plantation is still valued at over $100,000 per hectare!
Now how do I get Tasmanian farmers interested?
Tasmanian Blackwood Growers Cooperative 
Markets for farm-grown timber?
Here’s an email I recently received from a client that raises a number of important issues.
There’s no point growing trees for timber production if there’s no market for the timber. It appears that in NZ and Tasmania there are a number of places that farm forestry growers could sell blackwood as log or possibly sawn. What’s available in Victoria? I asked this question recently of one Victorian agroforestry consultancy. They didn’t have an answer. There are some furniture manufacturers in Victoria who use blackwood so they might be interested in taking timber but I’m guessing only if it has been sawn and seasoned. Perhaps some of the timber sellers will buy from growers but again I suspect if it has been sawn and seasoned. There are markets such as the craft/hobby/specialists such as luthiers which will take small volumes. I guess they could be supplied directly, through WWW fora or by selling to distributors.
This lack of clearly defined sales opportunities for species beyond E. globulus and Pinus radiata (and some niche opportunities such as several species that the Yarram sawmill actively pursues) is IMO a serious impediment for farm forestry in Victoria generally. I raised this issue in a submission to the Vic farm forestry strategy initiative a year or so ago. Perhaps that initiative will lead to some clarity of what can be sold where in Vic. There was an excellent guide published in Qld some years ago, for example, that details what timber is required for what markets and what prices may be expected.
There’s a great deal I could say in reply to this.
There are various reasons why farm forestry has never taken off in Australia despite the AFG having being around since the late 1960’s when the industry was much bigger than it is today. To me the main reason has been poor forest policy and management, and above all a lack of commercial process and management. The forest industry until recently has been run as a sheltered workshop for a select few, centred around a public native forest and plantation resource. So no transparent, competitive markets have ever developed for wood products in Australia. Farmers have never been encouraged to become commercial tree growers through proper market processes and competitive, transparent prices.
With the steady decline in the industry over the last 40 years, and especially since the GFC, the few remaining markets are rapidly disappearing. Sawmillers have traditionally played “rent seeker” with State Governments, rather than behave in a rational commercial manner and engage all landowners (public and private) to grow and supply them with sawlogs. Remarkably they are still behaving as rent seekers even as they now face almost certain extinction. The political games will keep them alive but it will be a long slow painful death; much like a cat playing with a mouse.
We are fast approaching the point where the hardwood sawmilling industry in Australia will collapse and disappear, and will have to be rebuilt from scratch, as they are attempting to do in New Zealand. In this new environment, portable sawmills will play a major role. Here are two examples of what the future may look like:
http://www.northcoasttimbers.net/ based in north-coast NSW, and
http://mobilesawmilling.com/ based in SE Queensland.
I can’t imagine why similar businesses are not operating in Victoria, such as one in Gippsland, another in the north east, perhaps another working the Otway/Ballarat area. Farmers who have small volumes of logs to saw for their own use or to sell would readily make use of such a service. And the portable sawmill owners could develop a network of contacts in the market to on-sell sawn timber. Being small, portable and efficient seems to be the key to success.
I suspect that most of our eucalypt hardwoods will never be valuable enough to support investment beyond this basic level, supplying small local niche markets. Even where high-value species are concerned, such as blackwood, the future will be difficult, unless those species already have significant local and international market profile (such as blackwood). The timber volumes required by the local market will be small even if the prices might potentially be high. Unless enough of a species is grown to allow access to export markets, then it will just be local niche craft markets. It’s a “chicken and egg” situation. Scale of planting and log value against local and/or export markets. One can’t happen without the other.
It will be interesting to watch how NZ blackwood farmers develop towards a collective marketing model for their trees that are now reaching commercial maturity. They have enough potential volume to begin accessing export markets so the rewards could be very good if they succeed.
Selling small parcels of logs and single logs will always be difficult, even if they are excellent quality logs of premium timber.
The fact that our sawmillers aren’t in the marketplace aggressively looking to buy sawlogs from wherever they can source them is a great curiosity to me. I can only interpret this behaviour as meaning that the logs are just not worth buying. The value of the timber is just not worth the effort. There are plenty of sawmiller websites around but I have yet to find one that has a “Wanted to buy” sign out the front. They are all about what they have to sell. Despite the collapsing industry the remaining sawmillers think their future supply is 100% secure. Very curious!
People like Jon Lambert at Heartwood Plantations have a much more commercial focus and a different business model, but I think even they don’t push the market hard enough. I’d love to know what they think of the current situation.
While the forest industry in Australia avoids becoming hard-nosed commercial and remains bogged down in politics and ideology, then farm forestry will continue to be a hard road. You mention the new Victorian farm forestry strategy. I’ve seen so many strategies come and go over the years with no impact at all, I’m afraid I’ve little faith in political support anymore.
So coming back to a farmer/growers viewpoint, you need to think carefully about what you are trying to achieve, and that means understanding the factors that will help or hinder you selling your wood in the future. Planting a lot of different species might be fun and interesting, but when it comes time to sell, you will find very few buyers unless you have done your homework.
What are the main local markets for premium timber? Cabinetry, flooring, furniture, panelling??? I don’t think structural solid hardwood has any future. What little structural hardwood that the market wants will all come from reconstructed wood such as LVL. So what species can you grow to supply the flooring and panelling market? Etc., etc…
I’m comfortable promoting blackwood because it has a well established local market profile and a growing international profile. But I realise my time is limited. If the remaining forest industry crashes and burns, as seems likely, then getting a growers cooperative going will be that much harder. Blackwood has a great future, but for the foreseeable future the Kiwis will be the drivers and dominant players in the blackwood market.
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